Financial Crime World

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Latvia’s Banks Emphasize Importance of Know Your Customer Process

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Banks in Latvia are implementing the Know Your Customer (KYC) principle to ensure better and safer services, comply with regulatory requirements, and prevent money laundering and terrorism financing.

The KYC Process

Under the KYC process, clients are required to provide full and up-to-date information about themselves, including:

  • Contact details
  • Nationality
  • Place of residence
  • Field of activity
  • Other relevant data

This information is periodically updated to ensure its accuracy and completeness.

Importance of Providing Information

The provision of such information is crucial for several reasons:

Banks must comply with strict legal requirements that oblige them to implement the KYC principle. This principle is essential in preventing money laundering and terrorism financing by ensuring that bank infrastructure is not abused by malicious entities or individuals who pose a threat to others.

Ensuring Customer Security

Banks care about their customers’ security and the safety of their accounts. With up-to-date details available, banks can ensure the security of accounts more easily, prevent illegal actions by fraudsters, stop suspicious transactions, and thereby protect their customers from financial losses.

Data Protection

The data provided by clients is protected by strict security and confidentiality rules, with disclosure only allowed if:

  • The customer has given written consent
  • It is required by law

In certain cases, authorized institutions may request access to client information, such as law enforcement agencies or the State Revenue Service. In these situations, banks are obligated to provide the requested information in accordance with the law.

Confidentiality and Secrecy

Banks have a duty to guarantee secrecy of customer identity, accounts, deposits, and transactions. Non-disclosable information includes any information acquired by the bank through provision of financial services under relevant contracts.

Consequences of Not Providing Information

If a client fails to provide necessary information, the bank may no longer be able to provide its services to that individual. This could result in restrictions on using one’s account, card, or online banking. However, money in the account will not disappear, and customers can regain access to banking services once they provide the required information.

Identifying Politically Exposed Persons

Latvian banks are also required to identify politically exposed persons whose role in society calls for heightened attention, including:

  • Family members
  • Close associates of individuals with public authority

Relevant Legislation and List of Countries Involved in Automatic Exchange of Information

The relevant legislation governing the KYC process can be found below:

  • Law on Prevention of Money Laundering and Terrorist and Proliferation Financing
  • Legal acts of Latvia
  • Law on Credit Institutions
  • Law on Taxes and Duties
  • Procedures by which a Financial Institution Implements the Due Diligence Procedures for Financial Accounts and Provides Financial Accounts Information to the State Revenue Service

A list of countries involved in the automatic exchange of information can also be found below.

Conclusion

The KYC process is essential in ensuring that Latvia’s banks operate safely and securely, and customers can trust that their information will be protected.